Starting next year, the South Korean government will expand the non-taxable limit for childbirth and childcare expenses from a flat monthly 200,000 KRW to 200,000 KRW per child. It will also include extracurricular education expenses for children under elementary school second grade or under 9 years old in the education expense tax deduction. In addition, liquid-type e-cigarettes will be regulated as tobacco products, and a regional doctor system with service-based and contract-based models will be introduced.
Under the revised Income Tax Act, the non-taxable limit for childbirth and childcare benefits will be raised to 200,000 KRW per child per month. Expenses for extracurricular activities for children under elementary school second grade or under 9 years old will also be eligible for education expense tax deductions. These changes apply to income earned from January 1, 2025 onward. The Corporate Tax Act has also been revised to increase corporate tax rates based on taxable income brackets, and the deductible limit for donations by social enterprises has been raised from 20% to 30%.
The Special Taxation Restriction Act includes provisions for separate taxation of dividend income. Dividends from high-dividend companies meeting certain criteria will be taxed separately at rates between 14% and 30%, rather than being included in comprehensive income tax. Additionally, spouses living separately from the household head will now be eligible for rent tax deductions. The basic deduction limit for credit card usage will be increased to up to 1 million KRW for taxpayers earning less than 70 million KRW annually, and interest from youth savings accounts will be tax-exempt.
Under the revised Tobacco Business Act, liquid-type e-cigarettes will now be classified as tobacco products and subject to advertising and online sales restrictions, effective April 2025. In the healthcare sector, the Regional Doctor Act introduces two models: service-based, where medical students receive financial support in exchange for 10 years of mandatory service, and contract-based, where specialists commit to working in designated areas for 5 to 10 years. Telemedicine will also be legally permitted for clinics under certain conditions, starting December 2025.